Senior VP of People and Places at Affirm, Chris Tobin, talks about the need to codify culture through values, and then goes on to explain his compensation philosophy, and it's impact on employee development.
Jack Altman: Welcome to another episode of Resources for Humans. I'm your host, Jack Altman, and we are here today actually at Lattice's office, and we are with a really special guest today. We're with Chris Tobin, who is the SVP of people and places at Affirm. Chris has an awesome background. He's worked at companies like Flipboard, Same Media, eBay, and now he's working at a really excellent company, which we're excited to hear about today. So, Chris, thank you so much for joining us.
Chris Tobin: Thanks for having me.
Jack Altman: To get started, I'd love to hear from you. What's Affirm all about?
Chris Tobin: Yeah. So our mission at Affirm is to build financial products to improve people's lives. We're disrupting an industry that needs disruption, but we're disrupting for the consumer and not just for disruption sake. Right now, our core product is a point of sale simple interest loan. You go on to a merchant site. You buy with Affirm, very clear what you pay over three, six, nine months, and you have no fees or compounding interest associated with that loan.
Jack Altman: Fantastic. So tell me, how did you get to Affirm in the first place?
Chris Tobin: So I've been with Affirm about a year and a half. And frankly, the simple answer answer is the mission of the company. It's very rare in my experience that you find a company that has a social leader of a mission, a massive market in front of you, and then all the other prerequisites you need for myself to to join a company. So great people, awesome entrepreneur, you know, people you wanna spend time with every day.
So after meeting Max and having conversations about, Affirm, it was sort of a no brainer for me.
Jack Altman: So on the topic of Max, who is an extremely successful entrepreneur, I'm curious to hear what's your relationship with the CEO there who does have so much success, and has done this before?
Chris Tobin: Yeah. Max is an intensely smart person. He is a driven person. He's extremely demanding. All qualities that you would, you know, you would think, you know, Max would be.
He's also a really good person. And when I'm thinking about working with a CEO in a company, that's one of the most important criteria for me is making sure that we align sort of from a values perspective.
And you can see it in the product that we're building. Like, it's a transparent, honest product focused on the consumer, and that translates into how we think about people and culture at Affirm.
Jack Altman: So do you see your role in terms of culture to be the steward and the builder of the culture or to partner with Max to pull out the culture that's organic to him?
Chris Tobin: I mean, a little bit of both. And I and I think that, you know, at our stage, stage, so we're about three hundred people, right now, it's important for us to codify what's important from a cultural perspective. So to actually draw a line in the sand and say, here are the things that are important, and here are the things that, you know, we don't we don't wanna spend time on.
And so, yeah, it's it's distilling, you know, some of those those sort of those nuggets of of truth that would be sort of the the glue that holds us all together. But it's not really about sort of necessarily being the only shepherd or or the steward. It's it's about helping to codify what's important and then to build programs that help reinforce the culture as you grow.
Jack Altman: And I'm sure you hear this question from Kent all the time, but how do you describe the culture at Affirm?
Chris Tobin: Yeah. It's a it's a complex construct as you know. And I actually frankly, I'd I'd love to to get into it with you, if it if it makes sense.
But the way I describe it, because I think it's the easiest way to sort of communicate what's important to us, how we want people to work together, how we build products is is through our values. And we've just actually gone through the process of recodifying the values at Affirm. And I'll quickly tell you what they are, and I could give you a couple of examples of where they show up. Our first value is, people come first.
Our second value is it's on us. Our third is simpler is better. Our fourth is no fine print. And then finally, our fifth is push the envelope.
So when you think about how we describe that to candidates and and frankly to to people within the company, we give real examples of how it shows up. So It's On Us is is one value that I think is has an interesting, sort of cultural underpinning for the company.
We sort of pride ourselves on being so scrappy.
We pride ourselves, you know, on, you know, being accountable for the things that we say we're gonna do. And you see it show up in how we work, sort of how we set goals. But you also see it in things like how we manage our office space.
Up until our most recent move, we we had a rotating, a rotating sort of cleaning crew, that would come through after every lunch and would would wipe down the tables and and and clean, you know, clean the office. Max would would be there. Nathan Gettings would be there.
Every every person in the company would literally take a turn hashing, and cleaning the space, which is, again, a good indicator of of, you know, what that value looks like in action.
I think one of the things that so many companies struggle with when creating their values is is this something that we sort of crowdsource from the bottom up, or is it something that is decided by the leadership team and then spread from there?
Yeah.
Jack Altman: What was that process like at Affirm?
It came from from Max from the beginning. And I think that one of the reasons that's the case is, I don't think he, at his last his last startup, actually codified, you know, those values early enough in his mind. So before he he started this company, he he wrote down on a piece of paper, sort of what the values of the company should be, how how he wanted employees to treat each other, how he wanted the values to inform how brought products were built.
So he had the first version.
I actually came sort of right in the middle of the recrafting of the second version.
And and now we like I said before, we've recotified sort of what those values are into the subtext.
But I think they they have to come from from sort of the core, sort of the DNA of the company.
I think it's okay to have some that are aspirational. But if you truly want values to be closely aligned to culture, then they they have to come from sort of the source.
And you all are going through hyper growth, and so, you know, I know you you mentioned that this has been this has been a big year for the company. Yeah.
There's a lot in store in the future.
And as companies grow from, you know, dozens to hundreds of employees and beyond, a lot changes. So what are you seeing are the ways to keep the core of that culture as certain business processes and other things change out of necessity?
Yes. So, I mentioned it before, and, you know, it's easy for this to become lip service. But codifying what's important is is step one. So you have to articulate what's important.
So mostly so you can teach new people how to be successful in the company. So when people think and talk about, you know, onboarding, that that's my main goal. Is that how do I how do I teach people quickly what's important? Where the potholes are?
You know, where where, you know, how to navigate sort of the organization.
And so one of the things you need to do is you need to codify and then communicate. And then secondarily, you have to weave those into the programs you build. So if you're talking about performance management, they have to be part of the way you assess performance.
If you're talking about development or learning and development, they have to be the the core of the competencies that then lead to the programming that you build.
So you you have to make connections over and over and over again and to reteach employees over and over again to make sure people know what's important.
And so on that topic, I'd love to now sort of transition to the sort of structures and programs that Yeah. You as the head of people do sort of instrument at the company.
One of the things I always find most fascinating is the topic of compensation, both as an employee joins the company and once the employee is already there over time. So what are the principles that you have in place around compensation?
Yeah. I mean, taking a step back, I think compensation is the most fundamental philosophy that needs to be discussed, articulated, and agreed to, early in a startup's sort of trajectory.
And frankly, that's actually one of the areas that I I wanted to align with Max on before I came onto the company.
Because it becomes so fundamental.
Especially in light of sort of all of the conversations in the industry today about pay, pay, equality, etcetera.
So spending time on creating comp philosophy or compensation philosophy is is, to me, sort of a fundamental practice.
And, you know, I don't think that every company has to have the same philosophy, but you need to be clear about what you what you care about. You also need to overlay your stage in total compensation on top of that philosophy. So if you're earlier stage, of course, you're gonna have a heavier, you know, balance of of equity. If you're later stage, you're gonna have a heavier balance of cash. And understanding what that journey looks like, understanding sort of the concept of dilution and how you wanna manage that, these are all really fundamental concepts that that need to be clearly articulated and mapped out, very early on in the company. So you don't get into, you know, issues of pay and inequality. You don't get into a place where you're paying too much, frankly, and you can't afford it.
And, you know, it it's fundamental to people's existence. Right?
The thing I would say that is sort of for me foundational, you know, because I think there's a lot of dials you can turn as it relates to what what your ultimate philosophy is.
But I I I believe sort of at its core that compensation is truly a hygiene factor from a motivation perspective.
And so when people don't feel like they're being paid fairly for what they're doing at a basic level, it's a demotivator.
But it's not gonna be the thing that keeps your employees engaged, you know, in the organization.
Frankly, research has shown that it actually is not a main factor of of engagement. So, you need to make sure at a minimum, whatever your philosophy is, whether you're gonna pay at the ninetieth percentile or the fiftieth percentile, that people are paid fairly for what they do.
And on that topic, to to what degree should companies be transparent? I know we've seen, you know, in Silicon Valley, there are certain companies that publish the salary of every employee. I think there are other companies that no information is shared.
Yeah.
I like what you just said about if it were printed, would we feel good about this? Yeah. But how should companies communicate compensation to employees?
More transparency for sure. Total transparency, I don't think makes sense.
You know, total transparency equals and I've had employees ask me this. Basically, just publishing everyone's salary in the company so everybody knows. Number one, it's it's a competitive disadvantage for for me. I don't want that list getting out. Then people know what I'm paying all of my employees.
Number two, market dynamics are dynamic. And so pay pay ranges change over time.
And number three, there's privacy issues.
What people make and their level is can be a very personal, you know, it is very personal.
But I do believe in sharing with individuals where they are paid on the pay range. And frankly, I'll even tell them what the next level looks like and what that range looks like.
I believe it has to be a conversation because there has to be context infused into that conversation. Because again, there are other dynamics that lay on top. How early of an employee were you in in the startup's life cycle? Do you have a very heavy equity position, relative to someone coming in now?
You know, did you make a trade off in your salary with your equity early on? Like, these are all dynamics that that go that that are overlaid and that are important.
So on this topic of how to treat compensation, one of the things that comes up a lot for companies is how to negotiate with employees as they enter the company. What are your thoughts around each conversation being unique versus, say, having very flat, compensation policies without negotiation?
Yeah. So so there are a couple constraints and one of one of them is a legal constraint. So in San Francisco, you're not allowed to ask, you know, people what their salary history is anymore. So that that has changed the way in which you you have the conversation with employees.
But I also think that every candidate has different motivations.
Some candidates, you know, they really want the opportunity to to to negotiate. They wanna ask for more. It's it it's part of sort of what makes them themselves.
There are other people who who wanna have choices. And I think the recruiter's job is really to get to the heart of, you know, what, you know, motivates the candidate.
And so I think it's okay to to negotiate, if if that is what, you know, is called for.
You have to be very clear about, you know, the consequences of of negotiation though. And one of them could can be sort of pay inequality.
Right? So if, you know, typically, you know, women, people of color, you know, don't negotiate their salaries as much as as white men. So if you do enter into a scenario where, you know, that is that is the case and you believe that negotiation is the right sort of conversation, if the candidate does not negotiate for themselves, you should really really having a a serious conversation with with internally if it makes sense to actually just add more compensation to the person's package.
So once the employee's at the company, I think there's a couple really important, systems in place that, that HR does. Yeah. So one one of those is performance management. And I'd love to hear not just what your own philosophy is with performance management at our firm, which of course I'd love to hear about, but also how should a company, a people ops team figure out how performance management should work at their company?
Yeah. I I mean, I think taking a step back, yeah, I think we both would agree, you know, given the the business you're in. I mean, performance management has has severely lost its way.
It it has become a process that is, in my opinion, that was never intended and and has conflated two concepts around compensation and and feedback. And so now, typically, when, a manager's having a conversation with their employee about what's working and what's not, The employee has this Pavlovian sort of response going on in their mind where they're saying, yeah, yeah, yeah, but what's my compensation rates? And so I think it's important when you're thinking about crafting your your your program, you know, I believe strongly that you need to fundamentally decouple the processes.
Compensation performance always should influence how you pay people. But decoupling the processes allows you to have a real conversation about what's working and what's not.
So I think that that's sort of one. I think two, I strongly believe in startups that you have to think about readiness, and you have to think about sort of culturally what is is most appropriate, but more so how ready is the organization for, you know, different types of processes, whether they're business processes or people processes.
And, you know, I've I've I've learned from my own mistakes over time, you know, of building too fast too soon. And I generally believe now that you need to start with foundational, programs or foundational portions of of the programs as a starting point. So feedback and development is a good example where you can have three sixties. You can have upward feedback.
You can have a goal in process. You can have all these things that that may be appropriate at some time. But at its foundation, our managers employees having meaningful conversations with each other. Does employee leave whatever cadence you have, bi yearly, quarterly, monthly, very clear about what's working and what's not.
And then what to do next. And that's to me, again, it's more about not so much sort of performance management, but understanding that fundamentally, that's what you're solving for. You're not solving for a rating system and you're not solving for anymore a natural distribution that then leads to, you know, a a pay increase. You've separated those two.
So much of what you're saying sounds just like good management to me and Yeah. Having managers in place who can set good expectations and goals, give frequent feedback and help employees develop. To what extent do you work through your managers on these things? Or to what extent is this a, we're all in this together, all the employees type of thought process?
Yeah. I mean, it's it's the the managers are critical, obviously, in in in this concept. And I think that's actually it's a great question. I think it's it's lost on a lot of folks. Like, it's very easy to say we want a culture of feedback. It's very easy to say, you know, we wanna just focus on the conversation.
But I can't be in the room for those conversations. I mean, if I am in the room for those conversations, it's for a different reason.
But I can't be in in all those conversations. And so the manager is responsible for making sure that that conversation is is a positive conversation, is an effective conversation.
On the flip side, I think very interestingly, and we've been doing some work here, the employee also is accountable in that exchange. And so we've actually trained employees, to hold their managers accountable in those conversations. So if they're not asking the question, the employees, we're trying to train them to say, you know, give me feedback on my on my performance and more specific questions, you know, surrounding, you know, the the process itself.
But I think that's also sometimes lost on on on people.
How do you tease out this tension between performance management, wrapping up feedback and development with performance and compensation?
Yeah. They are so naturally intertwined and it's great to be able to separate them. But in practice, how do you try to do that?
Yeah. It's it's it's absolutely true.
So we so we, we actually use a very traditional nine box assessment as part of our compensation process.
So feedback and development. So we stagger feedback and development and compensation. So it's four times a year we we alternate.
After performance, the feedback and and development, we move into the comp cycle. And so there there there is sort of performance fresh in the manager's mind. But what we make people do before we start to get to recommendations on how much money people make, if they're being promoted, we have them do a quick assessment on the nine box to determine performance potential.
The performance piece should obviously be informed by the conversations they've been having. The potential piece is is a different construct and an important one as it relates to promotability.
And so we've we force the managers to to to make some decisions.
We don't use the nine box as a, you know, high potential list because it's dynamic and it's meant to be. So if you enter into a new role, you might now be, you know, in the middle box instead of the top right box.
But we take we we use a nine box as as an input to the compensation process. So it's not just done subjectively.
So when we sit down with managers to review compensation, we say, how did you rate this person on the nine bucks? Okay. So you rated them, you know, medium performance and medium potential. Does it make sense for us to promote this person, you know, given how you how you view them?
And then conversely, you know, it could be, you know, the person is the top right box and there's no recommendation for a salary increase. Why why is that the case?
So we we use the nine box as a way to help us make informed decisions.
One more topic on this question before we move to employee engagement, which I have a bunch of questions on.
On this topic though, what is the way in which you make sure that employees don't have to go into management to keep moving up? Do you think about levels and ladders? Do you have other structures in place? Because this is something that is, I think, so common especially in technology businesses where there are people who are able to be highly impactful in individual contributor roles.
Mhmm.
How do you think about encouraging that when you need to?
Yeah. That's a great question. And I actually relate it very closely to to conversation philosophy. I think it's part of it. And so one of the outputs of that is a leveling system.
So we have ten levels at a firm.
We're still evolving is sort of our our architecture, you know, if you will. But the next step for us is to articulate by function what it means to go from, you know, level x to level y so that it's clear, to the person, so they know how to advance their career.
So that's setting step one.
Is there ever a case where you would allow somebody to go from a high performing IC to a low level manager, and give them that career path while taking away compensation? Or can you never reduce compensation?
I think you can reduce compensation. Actually, I think you see it on the revenue side quite a bit. So when you, you know, you have, you know, a a BDA, for example, someone who is sourcing, you know, opportunities, and then they move into a commission based role, a lot of times, they actually will reduce their base in order to have, you know, more variable. So I do think it happens.
I rarely see the reduction of of compensation in the scenario that you described. And I say that because, you know, I would imagine if you're doing that, you're sort of taking a bet on the person, and you believe that they can be successful, in the role. And so what I typically will do is, you know, just sort of freeze their compensation. But then more importantly, be really explicit with them about this is what we're doing and why, and this is what your growth looks like. So until you reach this level of manager, your compensation will stay the same. Once you hit this level, it will it will increase, you know, based on sort of the the, the comp the market data and and the compensation philosophy that we have.
So the last topic I wanna talk about with business process from the people ops team is employee engagement.
I know it's a somewhat amorphous term, but I know it's something that's important to you. So I'd love to hear, maybe first, how do you measure it and how do you think about it?
Great.
Yes.
So we use a traditional employee net promoter score outcome metric.
So it's would you recommend a firm as a great place to work? It's the same question, but internally focused as MPS that was developed by by Bain and Company that's used widely.
And we use that to track and give a signal for how the company is tracking, the health of the company and general employee engagement.
I believe that there are many variables that go into what leads to an engaged workforce. And and I think that if you hear someone tell you that they have the recipe, then then I I don't think they understand sort of the concept. But I do believe that there for us at our stage, there are a handful of things that are critical to driving that score. One of them has to do with the connection to the mission and vision of the company. A second has to do with whether or not your role is connected to goals of the company.
The third has to do with, if you are receiving feedback that helps you be better at your job.
And the fourth, I would say, is if you believe you have career opportunity and growth at the company. Those four things, and and you might argue, you know, belief in sort of the executive team, you know, as as a fifth, are really core and drivers of engagement. But they're not all the different variables that lead to what, you know, an engaged company can be. There could be structural challenges. There could be cultural challenges, and they could be by function.
So as we grow and scale as a company, you know, part of, you know, my challenge is how do I create an HR service delivery model that allows us to support the business specifically for the needs that they have. So engineering might have a different talent and engagement plan than the marketing team, because the needs of the business are different.
So when you think about taking this e n p s Yeah. What do you do with that afterwards? Like how does that translate into action from your team?
It's a good question. So we I mentioned the four driver questions. So when we see, you know, that that something has, you know, either, you know, dipped there, there's a a pretty direct and clear area for us to dig in. So if the question around, you know, I'm receiving feedback from a manager to to improve my performance drops, there's some obvious solutions there.
There are times when which you don't see driver questions change over time, but the EMPS might, you know, might drop. And that's an opportunity for for me or someone on my team to sit down with a leader and open a conversation with with he or she and their team about what's working and what's not in the organization. And like I said before, the solution might be, you know, might be something focused on, sort of, you know, a mentor. Like, there might be need for a mentorship, you know, program, in the organization, or there might need to be, you know, clarity in people's roles.
But, you know, you can work with the organization uniquely.
And so as our sort of last section of the conversation, I'd love to talk kind of back at a high level about your philosophy around people in HR.
You've been through multiple companies, and I I assume in some ways you've molded to some of those companies. In some ways, you've brought your own philosophy.
What are the ways in which you've found it important to bring what you've learned to your next company, and where have you decided I'm gonna adapt to to the culture here?
I think there are some very natural stages that companies go through, especially when you're talking about sort of mid and later stage startups, that are somewhat repeatable.
So there's a breakdown in communication.
People don't understand what their role is.
They're losing connection to to the CEO of of the company. These are all sort of natural, sort of people processes that start to break as you start as you start to scale.
Do you have a particular learning from, say, Flipboard or eBay that you come back to often in your current role?
I do. I mean, I think that, you know, one of the most important pieces, you know, from my first head of HR role at Same Media and then at Flipboard, so it goes back to sort of the readiness conversation that we have. I I know what I know what best in class looks like. I I know what, you know, a HR service delivery model at scale looks like from working at eBay and working at some microsystems.
Great learnings there. They are not necessarily the the the right structure framework, you know, for, you know, for they're not the right structure for a startup.
And and so knowing potentially where you you wanna go is a is a good thing.
But then building appropriately for size scale culture is is the biggest learning that I've had. And I've made mistakes of overbuilding my function, before.
And and now, you know, as I've said before, I focus on sort of foundation first.
What advice do you have to others who are at, you know, maybe a thirty, a sixty, a hundred and fifty person company, maybe three hundred? When they think about how HR's role is in scaling, what advice do you have for people as they look at their own companies and what they should be building?
I I mean, I think that that's I think you you you sort of answered the question in in in in your question.
I think you have to look look at sort of your role through that lens, through the lens of scale. And all the programs that you build, you know, should be should be in service of that.
And and to remember that, which is the hard part, is that you're replacing processes, whether they're business processes or people processes, that worked really well when the company was small. But they have started to break and fray at their edges, and now you have to replace those, with process and programs that help the company scale.
Alright. Well, Chris, thank you so much for having this conversation with us. Really enjoyed it.
Absolutely. Thanks for having me.
